European Perspectives on Philanthropy René Bekkers VU University Amsterdam The Netherlands June 29, 2015 Understanding Philanthropy Conference University of Kent

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Wall Street is an early example of Dutch Philanthropy. June 29, 2015Understanding Philanthropy Conference3

June 29, 2015Understanding Philanthropy Conference4 Stuyvesant called upon the 43 richest residents of New Amsterdam to provide funding to fix up the ailing Fort Amsterdam and to construct a stockade across the island to prevent attacks from the north, while it took New Amsterdam's most oppressed inhabitants -- slave labor from the Dutch West India Company -- to actually build the wall. Russell Shorto – The Island at the Center of the World

June 29, 2015Understanding Philanthropy Conference5 This is the ‘Giving house’ in the city of ‘s-Hertogenbosch. In the middle ages, the poor in the city received food and clothing at this house. Funds for the service were obtained through bequests, legacies and other donations from citizens, but also from the city council. Today, the building serves as the city’s library and an arts center.

June 29, 2015Understanding Philanthropy Conference6 The ‘Sweet Mary’ Fraternity was founded in Its first members were clergy. The fraternity engaged in charity and cultural activities. Ghisbertus van der Poorten donated his house in The acceptance of Protestants, including members of the Royal House of Orange, helped resolve religious conflicts that had dominated the city since the Spanish occupation in the 17th century. The current building in neogothic style dates back to 1846.

June 29, 2015Understanding Philanthropy Conference7 The ‘Sweet Mary’ Fraternity was founded in Its first members were clergy. The fraternity engaged in charity and cultural activities. Ghisbertus van der Poorten donated his house in The acceptance of Protestants, including members of the Royal House of Orange, helped resolve religious conflicts that had dominated the city since the Spanish occupation in the 17th century. The current building in neogothic style dates back to 1846.

Amsterdam Concert Hall June 29, 2015Understanding Philanthropy Conference8

Amsterdam Concert Hall June 29, 2015Understanding Philanthropy Conference9

The Rijksmuseum (1885) Understanding Philanthropy Conference10June 29, 2015

1880: VU University founded Understanding Philanthropy Conference11June 29, 2015

Willem Hovy ( ), owner of brewery The Crowned Falcon, donated guilders for the foundation of the ‘Vrije Universiteit’. Understanding Philanthropy Conference12June 29, 2015

Understanding Philanthropy Conference13 This is all history. We have ‘lost’ the philanthropic tradition. Since World War II, state subsidies dominate funding for nonprofit organizations. Philanthropy is in our culture – but institutions have discouraged it.

The Societal Significance of Philanthropy 1.The societal destination of philanthropy How much time and money do citizens in Europe contribute to which causes? 2.Social origins Who gives what and why? 3.The societal impact of philanthropy What does philanthropy achieve? 14June 29, 2015Understanding Philanthropy Conference

If only we knew… 1. How much time and money? We do not know. 2. How many people give and volunteer? It depends on the data; ‘methodology is destiny’. 3.What does philanthropy achieve? We do not know - it depends on many societal conditions. 15June 29, 2015Understanding Philanthropy Conference

June 29, 2015Understanding Philanthropy Conference16 Data from the Gallup World Poll. Map available at

Research Questions for ‘Giving Europe’ Which is the most generous country in Europe and why? 1.How large are differences in philanthropy (incidence, amounts, causes supported) between nations in Europe? 2.How can these differences be explained? June 29, 2015Understanding Philanthropy Conference 17

Giving Prevalence in Europe June 29, 2015Understanding Philanthropy Conference18

Why may countries differ? A.Because of population composition differences: some countries are populated with more generous citizens. (Who gives?) B.Because of country differences: some countries make citizens living there more generous. (When do people give?) June 29, 2015Understanding Philanthropy Conference19

‘Theories’: clusters of variables Political: ‘Worlds of Welfare Capitalism’, democracy, civic engagement, inequality Economic: ‘Crowding-out’, price of giving, wealth Cultural: religious traditions, social norms Legal: freedom for nonprofit organizations Psychological: trust, guilt, perceived need Communication: news consumption Biological: DNA, signalling, nutrition Thermoclimatic: adversity in weather June 29, 2015Understanding Philanthropy Conference20

‘Theories’: clusters of variables Economic: ‘Crowding-out’, price of giving, the wealth of nations Political: ‘Worlds of Welfare Capitalism’, democracy, civic engagement, inequality Cultural: religious traditions, social norms Legal: freedom for nonprofit organizations Psychological: trust, guilt, perceived need Communication: news consumption Biological: DNA, signalling, nutrition Thermoclimatic: adversity in weather June 29, 2015Understanding Philanthropy Conference21

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Mechanisms driving philanthropy 1.Awareness of need 2.Being asked to give 3.Costs and benefits 4.Altruism: how much others are giving 5.Reputation: social pressure and rewards 6.Psychological costs and rewards 7.Values 8.Efficacy June 29, 2015Understanding Philanthropy Conference23

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Why do people give? People give more (often) when 1.There is a clear needneed 2.They are being askedsolicitation 3.Costs are lower, and benefits are highercosts/benefits 4.They care about the recipients altruism 5.They receive social benefitsreputation 6.They receive psychological benefitsself-rewards 7.The cause matches their values values 8.Donations are perceived to be efficientefficacy Source: Bekkers, R. & Wiepking, P. (2011). ‘A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms that Drive Charitable Giving’. Nonprofit and Voluntary Sector Quarterly, 40(5): Available at June 29, 2015Understanding Philanthropy Conference25

Not today How much are monozygotic twins alike with respect to their giving? Why do people prefer charities with names similar to their own names? Why do men and women give differently? How is political affiliation related to giving? How much altruism is there in individual giving decisions? June 29, 2015Understanding Philanthropy Conference26

Mechanisms driving philanthropy 1.Awareness of need 2.Being asked to give 3.Costs and benefits 4.Altruism: how much others are giving 5.Reputation: social pressure and rewards 6.Psychological costs and rewards 7.Values 8.Efficacy June 29, 2015Understanding Philanthropy Conference27

The ‘Crowding-out Effect’ Occurs when a decrease in government funding leads to an increase in philanthropic funding for a cause. Or vice versa, when an increase in philanthropy reduces government funding. June 29, 2015Understanding Philanthropy Conference28

The Big Society / Participation State 29June 29, 2015Understanding Philanthropy Conference

The ‘Waterbed Effect’ Government grants Private donations The metaphor assumes the water mass is constant & contained, as if philanthropy and government funding are a ‘zero-sum game’. 30June 29, 2015Understanding Philanthropy Conference Friedman (1962) called this the crowding-out effect.

Questioning the metaphor The metaphor is not born out of research. For a researcher, it is a testable hypothesis. Empirical tests may as well reveal the reverse effect of ‘crowding-in’: when an increase in government funding increases philanthropic activity. The research question is: when and where occurs how much crowding-out? June 29, 2015Understanding Philanthropy Conference31

A meta-analysis June 29, 2015Understanding Philanthropy Conference32  Crowding-inCrowding-out  De Wit, A. & Bekkers, R. (2014). Government support and charitable donations: A meta-analysis of the crowding-out hypothesis. Paper presented at the 43 d ARNOVA Conference, Denver, November 20-22, UK studies

‘A severe cut in government funding to nonprofit organisations is not likely, on average, to be made up by donations from private donors.’ Abigail Payne (1998) Across all the published studies, a $1 increase in government support is associated with a $0.18 decrease in private charitable donations on average. 33June 29, 2015Understanding Philanthropy Conference

Contingencies US-based studies tend to find more crowding- out than studies from elsewhere, including Europe. Experiments in controlled environments (mostly with students) find more crowding- out than studies analyzing archival data from nonprofit organizations. June 29, 2015Understanding Philanthropy Conference34

The ‘crowding-out effect’ varies Between World regions and societies (macro-level) Organizations (meso-level) Citizens (micro-level) These three levels, and over time. June 29, 2015Understanding Philanthropy Conference35

It’s not as simple as rocket science June 29, 2015Understanding Philanthropy Conference36

37 Data from the Gallup World Poll show that citizens in countries in which the tax burden is higher are more likely to give to charity, suggesting a crowding-in effect June 29, 2015Understanding Philanthropy Conference

June 29, 2015Understanding Philanthropy Conference38 N = 111, r =.011 Outside Europe, there is no relationship between tax burden and the prevalence of giving

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EU investments in innovation In the European Foundations for Research and Innovation (EUFORI) Study, a consortium of 34 national experts documented ~12,000 foundations supporting R&I in Europe. In which countries are foundations most active? How do foundations view their relationship with government? June 29, 2015Understanding Philanthropy Conference41

June 29, 2015Understanding Philanthropy Conference42 N = 28 r =  Remarkably similar to the average ‘crowding-out effect’

Country characteristics June 29, 2015Understanding Philanthropy Conference43

June 29, 2015Understanding Philanthropy Conference44 N = 27 r = Countries above the diagonal rank higher in corporate investments than in foundation spending on R&I The UK is one of the countries that rank higher in foundation than corporate spending on R&I A strongly positive relation Scandinavia wins (again)

Flexibility is the rule The ‘crowding-out’ effect is flexible, open to modification – and may even become a crowding-in effect. Governments, nonprofit organizations, philanthropists and the public at large can influence it. 45June 29, 2015Understanding Philanthropy Conference

June 29, 2015Understanding Philanthropy Conference46 Source: Gouwenberg et al., (2015). EUFORI Study

Four models of collaboration Competitive: try to do better than government or make government do better Initiating: start a program, and export it into government policy Substituting: take over government tasks Complementary: work towards similar goals and strengthen each other as partners 47June 29, 2015Understanding Philanthropy Conference

June 29, 2015Understanding Philanthropy Conference48 Source: Gouwenberg et al., (2015). EUFORI Study

Recreating a ‘Giving Culture’ Overcome the modesty: “Do not let your left hand know what your right hand is doing” (Matthew 6:3). Develop new forms of philanthropy, mixed with business. Education could play a role in creating a giving culture, e.g. through service learning. 49June 29, 2015Understanding Philanthropy Conference

June 29, 2015Understanding Philanthropy Conference50 The stubborn 2% in the UK: giving as a % of GDP doesn’t change much Source: Perry (2013),

June 29, 2015Understanding Philanthropy Conference51 The expanding pie in the UK: giving as a % of expenditure increased Source: Cowley, McKenzie, Pharoah & Smith (2011)

June 29, 2015Understanding Philanthropy Conference52 The changing pie in the Netherlands: giving as a % of expenditure Sources: Schuyt, Gouwenberg & Bekkers, Giving in the Netherlands,

Popular concerns Under- or loss of coverage: the general level of service provision may suffer when the government retreats. Inequality: philanthropy may fund specific causes, but not others; Matthew-effects will help those causes with an early advantage. ‘Too much’ influence on public policy for philanthropists leading to arbitrariness, nepotism and inequality. 53June 29, 2015Understanding Philanthropy Conference

Giving USA June 29, 2015Understanding Philanthropy Conference54 Total giving, 2013: $335 billion (2.0% GDP; tax burden: 25%)

Giving in the Netherlands June 29, 2015Understanding Philanthropy Conference55 Total giving, 2013: €4.4 billion (0.8% GDP; tax burden: 38%)

What we need is… A serious political discussion about the role of philanthropy in public policy. Decent research informing policy decisions, paying attention to undesirable side-effects. An Impact Philanthropy Lab (IPL): creation and evaluation of new philanthropic / business investment instruments. Knowledge about what works in fundraising, and about failures. 56June 29, 2015Understanding Philanthropy Conference

June 29, 2015Understanding Philanthropy Conference57 Published Unpublished?

These did not work. Picture recipients on fundraising letters (-€40k). Calling alumni by current fraternity members. Reminding people of an event that made them feel grateful. Reminding people of an event that made them feel happy. Giving people more positive social information. Giving students the names of charity ambassadors. June 29, 2015Understanding Philanthropy Conference58

Published - Unpublished Picture recipients on fundraising letters (-€40k). Calling alumni by current fraternity members. Reminding people of an event that made them feel grateful. Reminding people of an event that made them feel happy. Giving people more positive social information. Giving students the names of charity ambassadors. June 29, 2015Understanding Philanthropy Conference59

These did not work either. Reducing the anonymity of donations. Giving the option of forfeiting anonymity. Switching the default from ‘giving’ to ‘keeping’. Telling people they are a helpful person. Telling people the government lowered its subsidy, increasing the need for donations. Showing students stylized eyespots. June 29, 2015Understanding Philanthropy Conference60

61 But real watching eyes…. June 29, 2015Understanding Philanthropy Conference

June 29, Suggesting a €35 contribution Understanding Philanthropy Conference

Framing the incentive as a match Proportion of the reward for participation in GINPS04 donated by participants +46% +90% 63June 29, 2015Understanding Philanthropy Conference

And finally. Good food…. And a drink. June 29, 2015Understanding Philanthropy Conference64

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June 29, 2015Understanding Philanthropy Conference66 From my Blog,

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Grams of food required to yield an additional €1 donation June 29, 2015Understanding Philanthropy Conference68

References Bekkers, R. (2015). The Analysis of Regional Differences in Philanthropy: Evidence from the European Social Survey, the Eurobarometer and the Giving in the Netherlands Panel Survey. Paper presented at the 5 th ESS Workshop, The Hague, May 22, Bekkers, R. (2015). ‘Regional Differences in Philanthropy’. In: Routledge Companion to Philanthropy, edited by J. Harrow, T. Jung & S. Phillips. Routledge. Bekkers, R. (2015). When and Why Matches are More Effective Subsidies Than Rebates. Research in Experimental Economics, Volume 18: Replication in Economic Experiments. Edited by Deck, C. Fatas, E., & Rosenblat, T. Emerald Group Publishing. Gouwenberg, B., Karamat Ali, D., Hoolwerf, B., Bekkers, R., Schuyt, T. & Smit, J. (2015). Synthesis Report EUFORI Study: European Foundations for Research and Innovation. Luxembourg: Publications Office of the European Union. Bekkers, R. (2014). The Fishy Business of Philanthropy. December 17, Bekkers, R. & Wiepking, P. (2011). ‘A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms that Drive Charitable Giving’. Nonprofit and Voluntary Sector Quarterly, 40(5): 924‐ June 29, 2015Understanding Philanthropy Conference69

Thanks, says René Bekkers Professor & Director Center for Philanthropic Studies VU University Amsterdam Twitter: Blog: renebekkers.wordpress.comrenebekkers.wordpress.com 70June 29, 2015Understanding Philanthropy Conference